Toyota Gets Slammed With Record Recall Penalty

The National Highway and Traffic Safety Administration has announced that Toyota Motor Corporation (NYSE:TM) will pay a record $17.35 million civil penalty for allegedly failing to report a safety defect to the federal government in a timely manner.

What did Toyota do this time?Toyota RX 450

In June, Toyota issued a recall of 150,000 Lexus RX 350 and RX 450h luxury hybrid SUVs because of a loose floor mat that could force down the accelerator pedal. The recall was another item in a long list of problems that have plagued the Japanese automaker since 2009, and isn’t even the first recall associated with unexpected acceleration. Following a number of reports in 2009, the company issued a series of recalls that affected nearly 19 million vehicles, some of which were related to a similar issue.

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That massive string of recalls was punctuated in October by a recall of over 7.4 million vehicles for an improperly-lubricated power-window switch that could catch fire, and again in November by a 2.77 million vehicle recall of the Prius due to problems with the steering mechanism.

The $17.35 million fine is the maximum allowable under the law, as was likely levied because of Toyota’s growing history of safety concerns. “Safety is our highest priority,” said U.S. Transportation Secretary Ray LaHood in the NHTSA statement. “With today’s announcement, I expect Toyota to rigorously reinforce its commitment to adhering to United States safety regulations.”

But Toyota isn’t the only major auto manufacturer with a growing history of safety concerns…

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Automobile safety is a top priority of both manufacturers and consumers, and recalls are to be expected. But this year stands because of the sheer volume of recalls issued.

Ford (NYSE:F) has issued a series of recalls, particularly for its Escape SUV, over the course of 2012. The company has issued at least five separate recalls, four of which involved the Escape.

For its part, General Motors (NYSE:GM) issued a recall of newer-model cars in November because of concerns that the rear-seat head restraints may not lock into place properly and could compromise safety in a collision. This followed an earlier recall related to a fuel-leak risk, and a nearly half-million vehicle recall related to a problem with the transmission in some vehicles that could cause them to roll after being shifted to park.

While the industry isn’t facing an epidemic, the NHTSA definitely looks set to crack down on manufacturers. Part of the settlement with Toyota will require the company and its subsidiaries to make internal changes to their quality assurance programs, and to conduct a review of safety-related issues in the United States.

The last thing a manufacturer wants is the government messing up a carefully calculated manufacturing process, adding an inefficiency to an already heavily-burdened industry.

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